Make a charitable-giving plan so you don’t scramble to donate at the end of the year. By Kimberly Lankford, Contributing Editor February 11, 2014 I rushed to write checks to charities before December 31 last year and want to do more to plan my charitable giving this year. What do you recommend?SEE ALSO: The Most-Overlooked Tax Deductions A lot of people scramble to make charitable contributions before December 31 to get a tax break, but they may not be making the maximum impact -- either for the charity or for their own tax situation. “When people give at the last minute, they may not be in a position to be as strategic with their giving,” says Sara Montgomery, philanthropic services specialist with Wells Fargo Private Bank. Sometimes you unintentionally end up diluting the focus of your giving because you didn’t have a plan in place, she says. And you may be able to stretch your tax benefits by planning in advance. Here are tips to help you make the most of your charitable contributions throughout the year. Make a charitable-giving plan. As you gather your 2013 charitable-giving receipts to file your taxes this spring, think about how you’d like to do it differently this year. Are there charities you would like to support more? Did you write checks last year you felt obligated to write? Ask your favorite charities what they need the most -- say, cash at certain times of the year (it’s not always in December) or larger donations spread over several years. “If you start planning earlier, you can give to the charity in a thoughtful way that makes the gift more meaningful,” says Tracy A. Craig, partner and chairwoman of the trusts and estates department at Mirick O’Connell, a law firm in Worcester, Mass. When you have more time, you can work with the charity to designate a specific purpose for the funds or make the most of matching offers. You may also discover that another type of giving could work better for you, such as a investing in a charitable gift annuity if you want to create an income stream for yourself, or making a charity the beneficiary of an IRA or life insurance policy. Advertisement Build charitable savings throughout the year. Rather than rush to make contributions in December, set aside a little bit of money for charitable giving throughout the year. You don’t need to make your contributions then; you can keep the money in a savings account earmarked for charitable giving or in a donor-advised fund so it’s ready to go when you’re ready (see below for more information about donor-advised funds). “If giving is important to you, make it a line item in your budget,” says Montgomery. Another benefit of saving early is that you’ll have some money ready to give if you want to help victims of a natural disaster or other emergency. Get an extra tax break from appreciated stock. Giving appreciated stock or mutual funds to charity gives you an extra tax benefit: You can deduct the current value of the investment as a charitable contribution if you itemize, and you’ll avoid paying capital-gains taxes on the profits. (You’d owe capital-gains taxes if you sold the stock first and then wrote a check.) Identify investments you may want to donate during the year, and set a target price for transferring them to charity. Ask the charity ahead of time about the steps for transferring ownership, so you’re ready to take action when the stock or fund hits your target price. For more information, see Charities: Give Stocks Instead. Consider a donor-advised fund. You can set up a donor-advised fund through many brokerage firms, mutual fund companies and community foundations. You get a tax deduction based on the date you give the money to the fund, but you have a nearly unlimited amount of time to decide which charities to support (you may be required to give a minimum amount every few years from the fund). You can’t take back your donations, and the administrator has the ultimate say over which charities to support, although most requests are honored as long as the charity is a 501c3 organization in good standing. You usually invest the money in mutual funds or investment pools until you’ve chosen the charities to support. You can donate cash, stocks, mutual funds or other assets, and some donor-advised funds even accept shares of privately held companies, real estate and other complicated assets. Donor-advised funds are a good vehicle for appreciated securities because you can easily transfer the stocks when they reach your target price. After you transfer the assets, you can take your time deciding which charities to support, and you can distribute the money to several different charities (you can often make grants of as little as $50 or $100). “It gives you the opportunity to separate the timing of the tax deduction and the gift to the charity,” says Christine Fahlund, a certified financial planner with T. Rowe Price. You usually need $5,000 or more to set up a donor-advised fund (for example, Schwab and Fidelity require $5,000 to get started; T. Rowe Price requires $10,000). See Donor Advised Funds: Contribute Now, Donate Later for more information. Advertisement Research the charities. A few good resources to start your search include Charity Navigator, the Better Business Bureau’s Wise Giving Alliance and basic information from GuideStar. You may have access to extra resources if you have a donor-advised fund (some donor-advised fund administrators, for example, provide access to GuideStar’s more detailed charity financial information). Community foundations can also provide a lot of information about local charities in your area (see the Community Foundation Locator for contact information). See 7 Ways to Check Out a Charity for more information about what to look for in your research. Donate after you declutter. You may be able to give a charity some of the clothes, furniture, toys and other household items you want to get rid of after you clean out your garage or attic. If the items are in good or better condition, you can get a tax deduction for their fair market value. See How to Properly Claim Deductions for Noncash Donations” for more information about valuing the items and what paperwork you need. Also keep track of any driving you do for a charity (you can deduct 14 cents per mile in 2014) and out-of-pocket expenses to help a charity (such as stamps you buy for a charitable mailing). Keep records of your mileage and expenses throughout the year so you can get credit for them at tax time. See Deducting Charitable Contributions for details. Plan your IRA required distributions carefully. If you are over age 70½, you have to take required minimum distributions (RMDs) from your traditional IRAs each year. For the past few years, you have been allowed to transfer up to $100,000 tax-free from your IRA to charity instead. That contribution counts as an RMD but not as adjusted gross income (you can’t make the tax-free transfer and deduct that same money as a charitable contribution, too). Congress usually waits until the end of the year to approve the law, and it has not yet approved it for 2014. If you’re interested in transferring money tax-free from your IRA to charity, consider waiting until closer to the end of the year to take your RMD. But don’t wait too long -- it’s usually a good idea to take the RMD or transfer the money to charity (if approved) by mid December so the administrator has enough time to process your RMD before the December 31 deadline. Miss that deadline and you’ll get hit with a penalty of 50% of the amount you should have taken for the required distribution but didn’t. Got a question? Ask Kim at email@example.com.